Summary: Type your answers to the following questions in your own words. You can type your answers or upload a file. Upon submission, you'll receive an originality report (up to 3 times). Make sure at least 80% of your answers is original. 1. Which of the following firms is better investment? Why? Firm X Firm Y Rate of Return (%) -70 0 15 100 Expected Rate of Return 2. Which of the following investments is better than others? Why? Prob. T-bills USR HT 0 5.5 9.8 12.4 Rate of Return (%) 3. (True/False. Explain.) A risk averse investor will prefer a well-diversified portfolio over a single asset portfolio 4. (True/False. Explain.) In some cases, diversification makes an investor worse off. 5. Is it possible to build a risk-free portfolio using risky assets? 6. What is worst portfolio you can make? How bad is it? 7. If an investor chooses to hold a one-stock portfolio (doesn't diversity), would the investor be compensated for the extra risk they bear? 8. How would a fall in inflation affect the security market line? A fall in risk aversion? What is the difference between independent and mutually exclusive projects? Compare NPV and IRR. Which one is better? Why is there a tax deduction from only cost of debt in WACC